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Millennials help drive growth of pet health care

Shilpa Mehra – September 11, 2019

"I've continued to favor the health care sector and am especially excited about companies focused on the health of animals," says Shilpa Mehra, portfolio manager of Fidelity® Trend Fund (FTRNX).

According to Mehra, the animal health segment has been expanding at a faster clip than the US economy, and she thinks the niche has been underpenetrated by investors.

Several secular trends are driving revenue growth in the segment, Mehra says. Most notably, many in the millennial generation, born between 1981 and 1996, have delayed getting married and having children, and a large number have made pets a very important part of their families.

Also, in recent years there's been more interest in preventive care for pets, she says, as opposed to sending pets to the veterinarian when there's an obvious problem. This, she says, also is a revenue driver in the segment.

She sees other advantages in the pet-care niche, including few competitors, dominant market positions for some companies, high barriers to entry, and fewer regulatory hurdles, compared with health care companies that develop products to treat people.

As of July 31, related positions in animal health included Idexx Labs (IDXX), which makes medical diagnostic equipment for pets; Zoetis (ZTS), a market leader in animal drugs that is best known for its flea, tick, and heartworm treatments; and Dechra Pharmaceuticals (DCHPF), a UK-based animal pharma company.

Learn more about this manager and her fund
Shilpa Mehra is portfolio manager of Fidelity® Trend Fund, which held securities mentioned in this article on July 31, 2019. As of this date, Idexx Labs composed 0.92% of fund assets; Zoetis composed 0.89% of fund assets; and Dechra Pharmaceuticals composed 0.49% of fund assets.

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